BSP seeks to stave off speculative attacks on peso

MANILA, Philippines —  A day after the local currency closed at the P59-per-dollar level for the first time, the Bangko Sentral ng Pilipinas is looking to arrest any speculation that might besiege the peso.

In a statement on Tuesday, the central bank said it is looking to address disruptions to financial markets in the country, adding that the dollar spot market remains open while “forwards and repos are available facilities.” 

“We ask those who have the means not to take undue advantage of changing market conditions. This does not help the Philippine Peso; it does not help the Philippines,” the BSP said. 

The central bank noted that these facilities allow for an organized settlement of dollar obligations. 

“What we can do is to bring all transactions into an organized and accessible formal market that offers consumer protection,” the central bank added. 

As it is, the peso's continued decline is foreboding for a Philippine economy reeling from imported inflation driven partly by expensive oil. The Philippine economy is also looking to regain economic momentum as it recovers from pandemic fallout in the past two years.

The peso reached a new low on Monday, hitting P59 against the greenback. 

Nicholas Antonio Mapa, senior economist at ING Bank in Manila, said the BSP is deploying open-mouth operations in a bid to minimize any speculation on the peso’s weakness.

“BSP recognizes the importance of legitimate transactions for commerce as this will spur economic growth,” he said in a Viber message.

“What they are hoping to minimize and mitigate are speculative moves and outsized fear-mongering which tends to drive undue pressure and panic on the spot market,” Mapa added.